There are many benefits of real estate tokenization versus traditional methods of investing in real estate. 9 Benefits of Real Estate TokenizationIncreased Transparency - Investors are able to know the property’s value in advance since there are regular updates to the blockchain-based system.Access to Capital - There is an increase in capital flowing into a project since the property can be fractionalized more efficiently allowing for more investors to participate.Diversification of Portfolio - Fractionalized shares allow investors to invest in multiple properties as well as internationally.An Investment backed by Collateral - Real estate tokens offer considerably less risk than cryptocurrencies since the tokens are financially supported by tangible property.Constant Oversight - The real estate token’s value shouldn’t fall below the net asset value (NAV) of the real estate assets due to regular checks and balances to ensure stability.Increased Pricing Accuracy - Since discounts due to illiquidity will be largely decreased, the price of the asset will approximate its real market value.

A wise lender will want other collateral unless it's a screaming deal and there is 20%+ equity capture at the buy   A car title if a small amount, for instance.

Guys like Joel at Rain City Capital and other private mortgage lenders (PML) can sometimes offer to finance 100% of the entire purchase (sometimes closing and rehab too) when you send funds to or put down 10-20% in a collateral side account.

Once you get going, a collateralized line is the way to fund flips.

They have said they would like the house to be listed as collateral against the loan.

@Dwayne Jones  more to it than new construction.. lender or note buyer will also look at the area.. the risk of the collateral not being torn up over time. 

It's a risky asset to lend on because of the lack of collateral so you will likely need a strong track record, a good amount of equity, a very solid pro forma and a flexible bank.Woul you consider partnering with an experienced GC for equity?

The point worthy of attention though  is the belief that they are able to "cross-collaterize" tenancies and withold payments from other tenancies in order to claw back monies they think ought not to have been paid on this one. 

The properties were not held as collateral on the loan, and there was no lien placed on them.

Once you get established, you may be able to change that as we have a program that will allow for experienced investors that can use the value instead of the sales price to calculate LTV requirements. as for a down payment on non-owner properties it needs to be your cash or a collateralized loan against an asset like another property, brokerage account, 401k etc.